The U.S. government is set to see another $5.6 billion from Fannie Mae and Freddie Mac as both GSEs continue to post solid earnings. Both companies released on Thursday their earnings reports for the second quarter, reporting subdued profits compared to recent quarters as settlement earnings and other previous one-time benefits subside. In 2011, the Federal Housing Finance Agency, acting as conservator for Fannie and Freddie, brought lawsuits against 18 banks for their alleged roles in bringing down the GSEs' portfolios with bad loans. The majority of those cases are now settled, leaving little for the companies to collect going forward.
By September, the two mortgage giants will have paid a combined $218.7 billion back to the Treasury, more than $30 billion more than the amount they've drawn since their bailout. Under their amended agreement, dividend payments will continue to go on as the government maintains its controlling stake in the companies.
Three men were arrested and charged in connection with what is believed to be one of the biggest mortgage modification schemes ever perpetrated, according to an announcement made by Christy Romero, Special Inspector General for the Troubled Asset Relief Program. The men are alleged to have stolen a total of $18.5 million dollars from more than 8,000 financially struggling homeowners in all 50 states by falsely promising them pre-approval for lower payments through the Home Affordable Modification Program and aggressive legal representation.